Janakpur Cigarette Factory (JCF) is in financial crisis and using overdraft for operational costs. It is currently at a loss of over Rs 530 million, including Rs 500 million overdraft and Rs 30 million interest.The crunch in operational capital occurred due to high maintenance costs and high wastage due to the old rotary filter cigarette producing machine and other equipment. JCF was set up 45 years ago with Russian support. It will cost Rs 440 million to change the machines. Technicians said it would require Rs 1 billion to keep the factory operating. They added that it is is suffering a monthly loss of over Rs 12.5 million due to old machinery. The management has urged the government to arrange funds by selling JCF's fixed assets like land. The factory owns land worth Rs 2.75 billion. Meanwhile, the factory is facing problems in arranging over Rs 260 million funds to be paid in gratuity funds to over 240 staffers who retired recently. Production in the factory has also been declining due to lack of modern equipment. Last year, the factory produced 1.15 billion sticks of cigarettes against the target of 2.36 billion sticks.
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